Online lenders battered by Coronavirus crisis

Online consumer and small business lenders facing challenges from all fronts

Funding has been problematic...

“Because these companies operate outside of the banking industry, they have never been able to turn to deposits as a stable source of loan funding. Instead they have relied heavily on alternative sources of liquidity — securitization markets, hedge funds and other private investors — that skeptics warned were likely to dry up during the next crisis.”

Also facing consumers that are behaving very conservatively: (1) not borrowing at previous levels; coming into this crisis with a 27% lower debt as portion of income than at the start of the Great Recession, and (2) saving record amounts, with 30% of consumers depositing their stimulus checks in savings and 25% using the checks to deleverage.

Whither #strategicDefault, the #credit bugbear this time around will likely be #strategicDelinquency

For further details, take a look at the #GoingConcern note in OnDeck’s latest 10Q.